Mert Bulan

Paying property tax while being a tenant in Germany

| reading time: 3 min(s)

A crying kid because of the taxes in Monopoly game

Paying taxes in Germany is a very serious topic. My German friend once told me that killing a person has fewer consequences than tax fraud in Germany. Joke aside, I am happy to pay my taxes if I can get something back (public services, free education, etc.) Every year, I pay my income tax and also declare my income from my investments and pay the taxes if I have to.

Nebenkostenabrechnung

Everything started with me checking my Nebenkostenabrechnung papers. If you don’t live in Germany, these papers show the details of the operating costs that you pay to your landlord besides your rent. Addinationly to my rent, I pay 40€ for my heating and 80€ for the operating costs (Betriebkosten) per month. The operating costs include many things like garbage collection, cleaning of the stairs in the building, cleaning of the street, maintenance of the garden in front of your building, insurance, vermin control, and so on. It is nice to see exactly how much I am paying for these services. I like this level of transparency. For example, from all the money (960€) that I paid last year for the operating costs, 202,16€ went to the garbage collection and 156,91€ went to the property and liability insurance.

While checking all the items in the operating costs, one thing took my attention. (actually two things but I will write another blog post for the other thing later). This item is called Grundsteuer which means property tax. This sounded interesting because I don’t own the property but I still pay for the tax of that property. I thought this is something that my landlord has to pay, not me.

I started to search on the internet and I found the law, Betriebskostenverordnung, Operating Costs Regulation, or BetrKV in short. (By the way, don’t forget it, everything but every single thing is regulated in Germany) While checking the first rule in that law I saw this:

die laufenden öffentlichen Lasten des Grundstücks, hierzu gehört namentlich die Grundsteuer;

It means:

the ongoing public charges of the property, this includes property tax in particular;

So as I guessed, this is something that does not come directly from my landlord but it comes from the law. So the law is allowing my landlord to pass the property tax to me. I find it weird that this is the first item in that law.

Anyway, even though it is in the law, I was still thinking that this is not the right thing and it should be challenged. So since I am living in Europe, I wanted to check the other European countries and see how they are handling this property tax.

The Netherlands

After a quick DuckDuckGo search, I found that there are two taxes related to having or using a property in the Netherlands. The first is property tax (onroerendezaakbelasting), as you guess it is for the owner of the property. There is also something called property user tax. This is for the tenant of that property but there is a catch. You pay this tax only if you rented the property for business purposes. So if you are just living there:

Tenants of residential properties do not pay property user tax.

As you can see, the tenants in the Netherlands don’t pay property tax like in Germany.

France

In France, there are also two types of taxes related to property but they are a little bit different than the Netherlands. There is taxe foncière and taxe d’habitation. As you guessed, the first one is the tax that the owner pays and the second one is the tax that the person who lives in that property pays but there is a catch.

In May 2018 the government published a report on reforming local taxes which stated that taxe d’habitation would be completely abolished by 2021.

So seems like the French government thought that paying taxes for just living in a rented flat doesn’t make sense and they decided to abolish it. So there will be only property tax for the owner of the property.

Spain

Normally a landlord is responsible for paying IBI (Impuesto sobre Bienes Inmuebles) tax and any community fees, but it can be agreed otherwise. Check this carefully.

So seems like, in Spain, in most cases it is paid by the landlord if otherwise is not agreed.

Switzerland

In Switzerland, as far as I understand, you only pay the rent and everything is included in that rent. The landlord pays the property tax directly from that money.

Property tax, sometimes known as land or real estate tax, is a cantonal or communal tax on land and buildings. It is payable by natural persons and legal entities who are recorded in the land register as the owners or users (usufructuaries) of a property.

You can see that during the corona times, the Switzerland government introduced a property tax rebate and asked landlords to pass that rebate to the tenants. So it is a big amount that make a difference in crises.

Conclusion

As you can see, in most of the countries in Europe, paying the property tax is something that landlords take care of it. In Germany, it is different. It is paid by tenants.

I don’t know if there is any plan like in France to abolish this but you might think that if the government says that the landlords have to pay the property tax, the landlords could increase the rent. For the new flats, they could do that but for the existing tenants that might be a little bit hard because as it is written in most of the contracts in Germany, the landlords can increase the rent based on the consumer price index (Verbraucherpreisindex).

After talking with my friends, I saw that the property tax is paid by the tenants is around 50-100€ per year. It might look really small but if you think how much money you pay for your online subscriptions like Netflix, Apple TV+, Amazon Prime, Spotify, Apple Music, etc. with the amount that you can save from your warm rent, you can buy a yearly subscription from one of those services. Also, keep in mind that almost half of the people that live in Germany rent their home instead of owning one. So this kind of change would help many people.

© 2020 by Mert Bulan.